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How can a company headquartered in Minneapolis merge with a competitor run out of Mansfield, Massachusetts in order to pay taxes in Ireland? It’s just another day in corporate inversion-land, where an opportunity to cut taxes is once again driving key business decisions.

This time, the buyer is Minnesota-based medical device maker Medtronic Inc. Its target is competitor Covidien PLC, which is legally headquartered in Ireland, though its top executives operate from a Boston suburb. The corporate tax rate for Irish-based companies is 12.5 percent. U.S. firms pay a top rate of 35 percent.

Its headquarters in low-tax Ireland is a significant reason why Covidien is worth $42.9 billion to Medtronic. By changing its legal mailing address, Medtronic it hopes to achieve significant tax savings. And by doing so, it is acquiring a firm with a long history of tax-shopping.

What’s driving the deal? To start, The Wall Street Journalreports that Medtronic has promised to distribute to its shareholders a big chunk of $14 billion in cash it is holding—much of it from foreign operations. To help meet that promise, the Journal reports, the firm has run up billions of dollars in debt to buy back shares or pay dividends.

By now, the problem is well-known. Medtronic owes no U.S. tax on profits earned overseas as long as the earnings stay overseas. But it would owe as much as 35 percent U.S. corporate income tax on any money it brings back to the U.S. Thus, it is cheaper to borrow (especially at today's low interest rates) than to pay the repatriation tax. By contrast, as an Irish firm, it could pay dividends without owing any U.S. corporate tax.

It could also use accumulated foreign earnings for future investment in the U.S., without having to pay any repatriation tax. Indeed, as part of this deal, Medtronic has promised to invest $10 billion in the U.S. over the next decade.

This transaction comes with a fascinating backstory, courtesy of the Covidien side of the marriage. For nearly two decades, Covidien and its former parent, Tyco International, have been schlepping around the world in search of low tax rates.

In 1997, former Tyco CEO Dennis Kozlowski did an early inversion by turning his conglomerate into a subsidiary of a small Bermuda-based security firm, ADT Limited. ADT took Tyco’s name. Tyco took ADT’s Bermuda address. And the new firm was firmly ensconced in a tax haven.

By 2007, Kozlowski had been convicted of looting $150 million from the company. A new regime spun off Tyco’s health care unit into a separate publicly traded firm, Covidien Ltd., also headquartered in Bermuda.

In 2009, with Congress pursuing legislation to crack down on tax havens, Covidien moved its headquarters to Ireland. Its former parent, Tyco, changed its legal address to Switzerland.

Finally, just a few months ago, Tyco also decamped to Ireland.

The image I’m painting implies these firms packed boxes, backed up the moving vans, and trundled off to a new tax haven every few years. In reality, none of that happened at all.

The firms and their executives go nowhere. Instead, they create a foreign-domiciled company so teams of lawyers can draft new incorporation papers that allow the new firm to shift its legal headquarters to wherever it can minimize its worldwide tax bill.

It is not news to say the U.S. system of taxing multinationals is a mess. Every time a firm does an inversion it highlights the problems. But when a firm with Covidien’s history is in the mix, it is hard to miss just what a mess it all is. As my Tax Policy Center Eric Toder has argued, you have to ask whether it makes sense at all to tax a firm based on a corporation’s legal residence.